New pension-cum-savings plan by year end: PFRDA

A new kind of pension-cum-savings scheme is on the anvil which would provide a safety net as well as liquidity to the holder.

The scheme, called tier II account, may be introduced by the end of this calendar year, a top official of Pension Fund Regulatory and Development Authority (PFRDA) told PTI.

"We are working on a pension saving account under New Pension System (NPS) and is likely to be operationalised by the end of this year," the official said.

The essential feature of this saving account would be liquidity. Customers needing money in emergency situations would be able to withdraw their deposited sum.

 

In this pension saving account, customers can withdraw almost the entire amount, though a small part might be retained with the fund manager, as directed by the interim pension regulator, the official said.

The pension amount withdrawn would be subjected to tax as it is under exempt-exempt mode like the Tier I account.

Under exempt-exempt, the amount is exempted from tax when deposited and also when it accrues interest, but tax is levied at the time of withdrawing the amount.

"Investment patterns and other guidelines would be the same as applied to Tier I account, which was operationalised from May 1," the official added.

However, the customers who wants to open the Tier II account should essentially have a Tier I account.